Historic Victory, Disordered Fee Awards: The NCAA $2.78B Settlement
We've talked a lot about how class actions far too often put attorneys' interests ahead of the class'. We've looked at settlements that have failed the class and ones that have honored the class action device. Now we are turning to the messy middle – the NCAA's $2.78 billion antitrust class action settlement that delivered for its clients but cut corners on fees.
Let's start with the obvious. A $2.78 billion result in a case that few in the plaintiff's bar would have touched is a historic result. While there are some troubling parts of the settlement (namely how class counsel picked and chose winners within the class), the settlement, as a whole, deserves the praise it's been getting.
The issue with the settlement is not even the amount of the fees; it's how they got there.
The Fee Structure Problem
If the class members had to hire individual lawyers, they could have been charged as much as a 40% contingency, or over $1.1 billion in total. Given the difficulty and novelty of the case, it's not unreasonable to think that the market would have found that number to be ex ante reasonable even in a collective action.
The problem for class counsel was that existing law didn't align with the market. The relevant law suggests that in "mega fund" settlements, fee percentages should go down as the settlement amount goes up. So class counsel, wanting to maximize their compensation but needing to avoid appellate scrutiny, did two things common to class action practice: They got creative. And then they made things as complicated as possible.
Here's what they did:
First, they divided the settlement into multiple parts. The first two were relatively straightforward: they sought and received $455.2m in fees for the money they brought into the class, representing 20% of the NIL settlement fund and 10% of an additional compensation fund.
Next, they took $20 million in fees for the injunctive relief they secured.
Then things get problematic.
The Future Fee Tail
Class counsel structured their compensation to include 0.75% to 1.25% of all future revenue sharing payments over the next ten years. With revenue sharing starting at approximately $20.5 million per school annually (rising to around $30 million), and dozens of schools likely participating, we're talking about billions in future payments. If just 65 Power Five schools participate at the maximum level, that's $1.3 billion in year one alone. Class counsel's decade-long cut? Between $150 million and $250 million.
The 11-Year-Old's Tax Bill
These fees will be paid by future athletes who aren't even in high school yet. An 11-year-old soccer player entering college in 2033 will have her earnings reduced to pay lawyers for a case filed when she was in elementary school. This child isn't a class member, received no notice, has no right to object, and doesn’t even know if she will play college sports—yet, if she does, she'll pay this tax.
Class counsel's answer? Future athletes can opt out within 60 days of arriving on campus. But this "solution" is meaningless for the ordinary athlete. Sure, a five-star quarterback with NFL prospects might have agents lined up to negotiate for him. But what about the swimmer, the tennis player, or the track athlete? What 18-year-old freshman without resources is going to hire a lawyer and risk their roster spot by confronting their university?
As both parties knew when they were negotiating this deal, an opt-out right is worthless when exercising it is economically and practically impossible—which is precisely why class actions exist in the first place.
Double-Dipping on Monitoring
As if taxing future children wasn't enough, counsel also reserved the right to seek additional "fees and costs for their ongoing work in monitoring and enforcing compliance" with the settlement. They're already being compensated through percentages of both the damages and the future revenue sharing. Now they want to bill hourly for monitoring a settlement they're already being paid to create.
This is like a real estate agent taking their 6% commission and then charging you hourly to attend the closing. You're either paid on percentage or you're paid hourly—not both.
A Dangerous Precedent
This structure—which was approved by the District Court—opens the door to a new era where class counsel can:
Negotiate settlements that effectively bind and tax future non-parties
Extract fees from people who had no voice in the proceedings
Create "opt-out" provisions that are practically meaningless
Layer multiple fee structures on top of each other
Imagine this model spreading: Data breach settlements where future customers pay fees. Employment settlements where future hires foot the bill. Product defect cases where future purchasers compensate the lawyers.
The Bottom Line
The NCAA settlement delivered real value to exploited athletes. That's worth celebrating. But the fee structure shows what happens when lawyers prioritize compensation over clean arrangements.
Yes, the "mega fund" doctrine creates bad incentives. Yes, counsel delivered historic results. But none of that justifies taxing children who aren't party to the lawsuit or double-dipping on fees.
When your fee structure requires this much gymnastics, you're not solving a problem—you're creating new ones. The past athletes deserved their money. The lawyers probably deserved theirs too. But they didn't deserve to get it from kids who are still learning algebra.